TIPS for Japanese Market Entry
Recently, the number of global startups trying to enter Japanese market gradually increases. Japanese government started “Startup Visa” system for making Japanese market entry easier accordingly.
In 2019, Indian unicorn startup, OYO, decided to join this trend backed by Softbank Vision Fund. OYO is mainly active in budget hotel market in Asian countries by providing their technology/knowhow for better user experience in the traditional industry.
But, they drastically changed their business model for Japanese market, which is “OYO Life”. OYO decided to disrupt not budget hotel market but “real estate leasing market” in Japan. There is notorious custom that every user has to pay “deposit” and “gratuity fee” to owners, which is very expensive. OYO Life excluded these processes and made hustle free UI/UX. But, interestingly, their primary target seems high-income people. They changed their customer segment as well here.
As of now, I have no idea whether this strategy could work or not. But it tells us important lesson, which is to adapt to each market and localize your product.
01Booster has accelerated more than 200 startups so far. But most of them are Japanese startups. In 2018, we decided to provide more supports to cross-border startups, hence established “Across Asia Alliance” with Bigbang Angels from South Korea and Chinaaccelerator from China for accelerating cross-border market entry/investment all across in Asia. 01Booster, as a board member from Japan, organized 1 week market entry program last autumn, which is “ReShape Tokyo” program with Asian startups.
This program focuses on hypothesis validation for localization and connecting with Japanese startup communities via meetings with various potential users/mentors/industrial experts. Here is TIPS we learned from that program.
1. Interview/Meet with Japanese industrial insiders as many as possible:
This is quite common for startups, but sometimes forgotten when it comes to new market entry. Even if startups achieve Product/Market Fit in their mother country, that PMF does not necessarily work in Japan. Then, what is the first thing will you do?
2. Understand difference in decision making process by corporates:
In general, C-level people do not decide by themselves alone in Japanese companies. They rather prefer to make consensus and alignment with middle/senior management teams or other C-level people. Therefore, it takes time until decision made. Don’t get rushed.
3. Entrepreneurship is the key:
There could be many structural differences between mother market and Japanese market. Hence, 0→1 process will wait for startups. Who can handle this? Usually, it is entrepreneur’s job. To assign potential Country Manager or somebody who lives in Japan is OK, but sometimes does not work due to this reason.
4. Language barrier:
One statistic shows only 10% of employees in Japanese companies can speak English… According to my experience, this is true. Definitely, there are some English speakers, but not necessarily in departments startups trying to work with… In this case, deals often stacked. It would be great if startups have Japanese speaker or work with some organizations which support startups entering Japanese market in this context. (Of course, this is not MUST . Sometimes it is OK until PoC starts. )
These are just part of our learning. Will show more someday!
If you are the startup trying to enter Japanese market, or government/corporations thinking of setting up some schemes for startups trying to hit Japanese market, please contact us!
Takeru Kawashima, Director
